The Fed has entered the chat: Two days of rate-watching and policy pondering begin now. Rates are most likely staying put (spoiler). Everyone crosses their fingers for September relief while the latest residential market head-scratcher is the typical starter home sold for a record high of $260,000 in June (start of poverty maybe). Commercial real estate is still trying to figure out which end is up  with Brookfield flexing $13 billion in sales while warehouse owners nervously watch vacancy rates climb to levels not seen since the Obama administration. On the bright side, lenders are feeling optimistic enough to throw around $35 billion in CMBS deals, and if you’re apartment hunting, you can either live like royalty in Wichita with 1,329 square feet for $1,500 or embrace the Marie Kondo lifestyle in Manhattan with a cozy 216 square feet for the same price. Let’s get you caught up and out the door in 3 minutes. Tim
Today’s newsletter was prepared by our AI platform ALFReD. Know Better. Work Smarter. Be More Successful.
KEY TAKEAWAYS
The real estate market continues to show resilience despite elevated interest rates, with starter homes outperforming, policy shifts at federal agencies, and technology driving industry consolidation.
Fed Opens Critical Policy Meeting: Federal Reserve begins July 30-31 FOMC meeting with markets pricing in 97% probability of no rate changes, maintaining federal funds rate in 5.25-5.50% range as focus shifts to September meeting for potential cuts1
Treasury Markets Signal Extended Rate Environment: 6-month Treasury yields remain glued to the Effective Federal Funds Rate while 30-year yields hover near 5% in the 4.90-4.96% range, indicating no anticipated rate cuts through September2
Home Prices Extend Growth Streak: S&P CoreLogic Case-Shiller Index shows positive growth in May 2025, marking 24th consecutive month of increases though pace has moderated significantly from pandemic-era surge to more sustainable levels3
FHFA Director Reverses Biden Policies: Agency seeks repeal of fair lending and equitable housing finance regulations under Director Bill Pulte, calling them “unnecessary and redundant” with existing HUD, CFPB, and FTC protections4
Starter Homes Defy Market Weakness: Sales rose 3.9% year-over-year in June to highest level since June 2023 while inventory climbed to highest level since October 2019, outperforming all other price tiers5
Anywhere Real Estate Posts Strong Quarter: Company reports $1.7 billion revenue with luxury segments including Coldwell Banker Global Luxury, Corcoran, and Sotheby’s International Realty outperforming broader market by 3.5%6
AI Technology Drives Industry Consolidation: RealPage acquires Rexera to create nationwide automated transaction processing system supporting more than 1% of all U.S. residential transactions monthly7
RESIDENTIAL REAL ESTATE MARKETS
Housing markets show continued price growth and inventory improvements, with regional variations and the starter home segment demonstrating particular strength despite broader market challenges.
PRICE TRENDS & MARKET CONDITIONS
Case-Shiller Index Maintains Momentum: S&P CoreLogic Case-Shiller Index posts positive home price growth in May 2025, extending the streak to 24 consecutive months of increases, though the pace has moderated significantly from pandemic-era surge to more sustainable levels reflecting market normalization 3
Regional Markets Show Stark Divergence: Northeast and Midwest markets maintain highly competitive conditions due to persistent inventory constraints and strong buyer demand, while Southern and Western markets experience increased price reductions as listing volumes grow and market dynamics shift toward buyers 8
Inventory Recovery Accelerates: Housing inventory levels surge 16.9% year-over-year, marking the most significant shift toward market balance after years of severe shortages, creating substantially more favorable conditions for buyers with reduced competition and enhanced negotiating power 8
STARTER HOME MARKET PERFORMANCE
Entry-Level Sales Surge Against Trend: Starter home sales rose 3.9% year-over-year in June 2025 to reach the highest level since June 2023, demonstrating remarkable resilience while sales declined across all other price tiers as affordability challenges concentrate buyer activity 5
Record Pricing Despite Supply Growth: Typical starter home sold for record $260,000 in June, representing 3.1% year-over-year increase, even as inventory climbed to the highest level since October 2019, highlighting persistent demand among first-time buyers seeking affordable options 5
Geographic Concentration Drives Performance: San Diego recorded impressive 18% spike in starter home sales leading national performance, while other metropolitan markets showed more modest gains, indicating significant regional variations even within the more accessible price segments 5
MARKET DYNAMICS & SELLER BEHAVIOR
Sellers Resist Market Adjustment: Delistings surge 47% year-over-year as property owners choose to withdraw listings rather than accept lower prices, effectively preventing more rapid price adjustments and maintaining upward pressure on home values across many markets 8
Buyer Conditions Continue Improving: Increased inventory levels create substantially reduced competition and enhanced buyer negotiating power throughout most markets, though the pace of recovery varies significantly by region with Northeast and Midwest still experiencing relatively tight supply conditions 8
MORTGAGE MARKETS
Federal agencies signal policy reversals while mortgage rates remain elevated, with Treasury markets indicating no near-term relief from current financing costs.
FEDERAL AGENCY POLICY CHANGES
FHFA Seeks Biden-Era Regulation Repeal: Agency posted Federal Register notice to repeal 12 CFR Part 1293 requiring government-sponsored enterprises Fannie Mae and Freddie Mac to engage in equitable housing finance planning and support underserved communities 4
Director Pulte Cites Regulatory Redundancy: FHFA Director Bill Pulte argues that similar regulations from HUD, Consumer Financial Protection Bureau, and Federal Trade Commission provide sufficient consumer protections, making the FHFA rule “unnecessary and redundant” while imposing costs on government and regulated entities 4
Continued Policy Reversal Pattern: Represents the latest in a series of Biden-era housing policy rollbacks since Pulte assumed office in March 2025, signaling broader shift in federal housing finance approach under current administration 4
INTEREST RATE ENVIRONMENT
Mortgage Rates Remain Stubbornly High: 30-year fixed rates averaging 6.89% as of late July with refinance rates reaching 7.05% after three consecutive daily increases, continuing to constrain buyer demand and refinancing activity as borrowers await more favorable conditions
Treasury Signals Dash September Hopes: 6-month Treasury yield remains glued to Effective Federal Funds Rate indicating no anticipated rate cuts through September, while 30-year Treasury trading in 4.90-4.96% range approaches psychologically significant 5% threshold 2
Real Rates Return to Historical Norms: Real mortgage rates adjusted for inflation have returned to pre-quantitative easing normal ranges since second half of 2023, suggesting current elevated rates may represent permanent shift rather than temporary elevation requiring fundamental market adjustments 2
LEGISLATIVE DEVELOPMENTS
Senate Banking Advances Comprehensive Housing Bill: Committee approved ROAD to Housing Act of 2025 with bipartisan support from Chairman Tim Scott (R-S.C.) and Ranking Member Elizabeth Warren (D-Mass.), addressing housing supply constraints, federal program streamlining, and small-dollar mortgage lending access 11
MBA Applauds Legislative Progress: Mortgage Bankers Association supports comprehensive approach including provisions for both ownership and rental market supply expansion, with particular focus on rural and underserved communities while continuing engagement on lender liability and appraisal reforms 11
ECONOMIC & POLITICAL NEWS
Economic indicators present mixed signals with stable employment, persistent inflation concerns, and Treasury markets signaling extended higher rate environment as the Fed begins its two-day policy meeting.
FEDERAL RESERVE POLICY MEETING UNDERWAY
Two-Day FOMC Meeting Begins: Federal Reserve opened July 30-31 policy meeting with markets pricing in 97% probability of no rate changes, maintaining federal funds rate in 5.25-5.50% range as policymakers assess economic conditions and inflation trajectory 1
September Meeting Takes Center Stage: Market attention shifts decisively to September 17-18 FOMC meeting where first rate cut since 2020 is widely anticipated, contingent on continued labor market stability and sustained inflation moderation toward Fed’s 2% target 1
Powell Press Conference Wednesday: Fed Chair Jerome Powell will hold press conference following Wednesday’s policy announcement, likely providing crucial guidance on future rate path, economic outlook, and conditions required for monetary policy easing 1
TREASURY MARKET SIGNALS
Bond Markets Reject Near-Term Cuts: 6-month Treasury yield serving as reliable Federal Reserve predictor remains firmly attached to Effective Federal Funds Rate, providing clear indication of no monetary easing expected in third quarter despite earlier market optimism 2
Long-Term Yields Approach Critical Level: 30-year Treasury yields trading in 4.90-4.96% range approaching psychologically significant 5% level that could trigger broader reassessment of long-term inflation expectations and monetary policy effectiveness 2
New Rate Reality Takes Hold: Current interest rate levels may represent permanent structural shift rather than temporary elevation, requiring fundamental adjustments across real estate markets, financing strategies, and investment calculations 2
LABOR MARKET STABILITY
Job Openings Hold at Equilibrium: 7.8 million job openings in May 2025 with 4.6% job openings rate suggests labor market has reached more sustainable equilibrium after years of post-pandemic volatility and dramatic swings 12
Real Estate Sectors Show Growth: Accommodation and food services sector added 314,000 job openings while finance and insurance gained 91,000 positions, partially offset by decreases in federal government employment reflecting ongoing public sector adjustments 12
Worker Confidence Remains Elevated: Quits rate unchanged at 2.1% indicates continued worker confidence in ability to find alternative employment opportunities, supporting consumer spending power crucial for housing demand 12
ECONOMIC GROWTH INDICATORS
Services Sector Drives Expansion: S&P Global US Flash PMI rose to 54.6 in July indicating continued economic growth driven primarily by services sector strength, though manufacturing PMI dropped to 49.5 signaling contraction in goods-producing industries 13
Inflation Pressures Intensify: Companies report significantly higher costs attributed to tariffs and labor shortages, with rate of price increases for goods and services reaching levels not seen in three years, suggesting potential future inflation above Federal Reserve’s 2% target 13
COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)
MARKET OVERVIEW
Mega Deals Return: Brookfield Asset Management has sold $13 billion in real estate in 2025, marking a sharp increase from $3B in H1 2024 and $2B in H1 2023, signaling the return of large-scale transactions to global CRE markets 1
Interest Rate Spreads Reflect Risk Profiles: Agency debt offers most affordable financing at 5.71-5.74% rates, while riskier products including single-borrower large loans command significantly higher 8.30% rates, demonstrating clear risk-based pricing differentiation 14
Industrial Vacancy Surge: Warehouse vacancy rates hit 7.3% in Q2 2025, the highest level since 2013, with new supply (71M SF) significantly outpacing net absorption (23M SF) for the 12th consecutive quarter 2
Sector Recovery Uneven: Strong demand continues for rental housing, logistics, and data centers, while older office buildings face persistent high vacancy and weak demand, with tech layoffs driving further office space decline nationwide 3
Retail Portfolio Activity: Onyx Partners closed a $947 million all-cash acquisition of 119 retail properties at a 10.4% cap rate, completing Copper Property Trust’s five-year J.C. Penney bankruptcy liquidation process 4
CRE FINANCING
CMBS Market Surge: Commercial mortgage-backed securities issuance reached $59.55 billion in H1 2025, representing a 35% increase year-over-year and the largest volume in over 15 years, with major NYC deals including Blackstone’s $850M loan for 1345 Sixth Avenue 5
CMBS Issuance Growth Projected: Commercial mortgage-backed securities conduit issuance expected to reach $35 billion in 2025, representing 6.4% increase from 2024 levels as market recovers from two-year slump in commercial real estate lending activity 14
CRE CLOs Experience Dramatic Surge: Commercial real estate collateralized loan obligations projected for 274% growth to $32.5 billion, while single-borrower large loans track toward $90 billion representing 28% gain over 2024 performance 14
CRE Lending Recovery: Industry projections show CRE lending set to surge past 2024 levels, with CMBS conduit issuance and CRE CLOs experiencing significant rebounds after 2023’s sharp contraction 6
GSE Activity Increase: Government-sponsored entities including Freddie Mac and Fannie Mae are projecting increased loan originations, with interest rates stabilizing and renewed investor interest in logistics and multifamily assets 6
California Disclosure Requirements: New regulations mandate commercial financers maintain disclosure records for four years and ensure brokers provide proper documentation to recipients, enhancing transparency in CRE financing transactions 7
CRE SERVICING
Special Servicing Increases: The balance of loans in special servicing rose by $750 millionover the past period, indicating continued stress in certain CRE loan portfolios 8
Regulatory Compliance Updates: Oregon credit unions must adhere to enhanced construction and development lending guidelines requiring qualified personnel reviews and on-site inspections for loan disbursements 10
Energy Infrastructure Impact: Federal Energy Regulatory Commission approved new reliability standards for frequency and voltage protection affecting inverter-based resources, potentially impacting CRE properties’ energy management and compliance requirements 11
INDUSTRY NEWS
Real estate companies report mixed quarterly results while technology acquisitions accelerate industry transformation and commercial lending shows recovery signs.
CORPORATE EARNINGS & PERFORMANCE
Anywhere Real Estate Delivers Strong Results: Company reports revenue of $1.7 billion representing $13 million increase from same period last year, with net income attributable to Anywhere reaching $27 million up $3 million year-over-year and operating EBITDA hitting $133 million 6
Luxury Brands Outperform Broader Market: Coldwell Banker Global Luxury, Corcoran, and Sotheby’s International Realty demonstrated exceptional resilience with 3.5% year-over-year increase in closed transaction volume, significantly outpacing overall market performance 6
AI Innovation Shows Measurable Impact: Company’s artificial intelligence and digital innovation pilots achieved impressive results with mortgage capture rates increasing by 2.5 percentage points and warranty attach rates rising by 4 percentage points, demonstrating technology’s transformative potential 6
